Ruben Alvarado

Copyright © 2000 Ruben C. Alvarado

this edition published 2013 on commonlawreview.com

The Western legal tradition provided the context for the development of the Constitution of Liberty. Legal historian Donald Kelley argues that the true “perennial philosophy” – the ongoing dialogue about reason, truth, justice, meaning – was the legal tradition together with philosophy and theology. [1] Anyone who delves into the works of pre-modern political and legal theorists will note that theological and philosophical matters were dealt with in tandem with political and legal ones. Theologians and philosophers were likewise busy with political and legal questions. The common-law tradition therefore is not simply a matter of legal-historical importance but of cultural and educational importance. It is the tradition upon which our civilization is based; an acquaintance with it is an absolute imperative for those who wish to achieve cultural literacy.

Basic to the common-law tradition is the subordination of sovereignty to property. In Roman legal terms, imperium exists to serve dominium. Among other things, this means that sovereignty is not a power to create law, but only the power to enforce law. The power to create law is the formula of absolutism and tyranny. It is also the philosophy of modern politics. Modern politics feeds off of the evolutionary world-view that states that ultimate reality is flux and has no meaning, and that law is man’s tool for imposing order on this pre-existing chaos. By extension, then, the state is the means by which man achieves order amid the chaos of society. But the common-law tradition does not postulate a pre-existing chaos but rather a pre-existing order by virtue of being created by God. It also postulates a pre-existing law-order in society that does not have to be created but rather must be recognized by the sovereign.

Therefore public law exists to serve private law. This is a corollary of the first principle, and is crucial to a proper understanding of the Constitution of Liberty. The public-law/private-law distinction is prior to all legal philosophizing; it has to be assumed – it cannot be ignored. Even the German socialist legal philosopher Gerhard Radbruch recognized this. “The concepts ‘private’ and ‘public law’ are not concepts of positive law that could just as well be eliminated from a particular positive law order, but much rather logically precede the practical application of law and seek application ahead of time in any practical application of law. They are a priori law concepts…. The distinction between private and public law is anchored in the concept of law itself.” [2] Radbruch argues that the priority one gives to private over public law or vice versa is historically determined and as such is more or less a matter of preference; the common-law tradition understands and proclaims that the priority must go to private law.

This is not to say that the social contract theory of the origin of property and the state is the correct one. The social contract theory, remember, derived the powers of the state from the individual’s natural lordship, with the individual transferring this sovereign lordship to the state, thus endowing the state with the power of the sword. With this theoretical construct, the social contract theory conflates dominium and imperium. But: imperium and dominium, sovereignty and property, are fundamentally distinct. Dominium is the power one has over something; imperium is the authority to enforce the law over third parties, which law is primarily concerned with protecting dominium.

We say that public law exists to serve private law, and we do so because the state exists to administer justice, and public law is a means to that end. Public law regulates civil government. It ensures that civil government is able to function properly. But it does not tell us to what end civil government functions. It does not provide the goal, the rationale of civil government, only an internal structure to ensure its well-being. The end of civil government extends beyond public law to all the associations of which society is comprised. The law regulating the inter-relations of these associations, the law regulating and coordinating their several activities, is private law.

Private law has a unique structure that cannot be reduced to any other form of law; it has its own independent existence. This is the burden of an important book by Ernest J. Weinrib entitled The Idea of Private Law. [3] Private law, Weinrib argues, is characterized by the bilateral relationship of the parties involved. Two parties are involved, joined by an action, one party acting, one party being acted upon. What flows out of such an action, whether agreeable or disagreeable, forms the subject matter of private law. Concepts of distribution and administration do not enter into this equation, because such concepts import considerations that do not flow from the relation. The resolution is inherent in the relation, and depends upon the consideration of the action itself.

The private-law relationship is necessary because contemporary society is not a monolithic organization but rather a plethora of organizations and communities. As Johannes Althusius wrote in his Politica Methodice Digesta, society as a complex of associations beginning with family and progressing to the state. It is these associations that are the owners in society, and not primarily individuals. (Thus the charge lodged against private ownership, that it is a system of possessive individualism and thus antisocial, is from the start categorically refuted. Private ownership is ownership by private associations, beginning with the family. Purely individual ownership forms the exception, not the rule.) And it is the interactions between owners, thus between these, shall we say, ownership entities, that form the subject matter of private law.

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The two kinds of justice first delineated by Aristotle, distributive justice and commutative justice, highlight this difference. Distributive justice involves the proper distribution within a given organization or community. It refers to goods common to all, owned by all, to be distributed in terms of what each member merits. Commutative justice, on the other hand, refers to exchange between organizations or communities, regarding goods not shared or owned in common but rather owned separately by the exchanging parties, and therefore not falling under the authority of a distributing agent but free to be disposed of by the separate parties involved. Thus the difference between commutative and distributive justice is based on the question of ownership. Within the bounds of ownership, distributive justice prevails; outside the bounds of ownership, thus among free, “autonomous” actors, commutative justice does. It is the difference in ownership which explains the difference in law.

Private law therefore is the law applying to relations between these owners; it is, as we said, an external, coordinating law. Now the associations falling under the regime of private law are also governed by internal law-orders peculiar to each – family law, corporate law, laws governing foundations, clubs, etc. – and these law-orders, being internal, are expressive of the principles of distributive justice. Private law does not extend into the internal affairs of these associations; they form a world apart.

Public law, as we said, concerns the internal functioning of the public association, which is civil government. It is therefore concerned with those things the citizens hold in common. This may be common property, but it has more to do with the functions of government proper, which is something all citizens share in, both administering those functions (public office) and paying for those functions (taxation). For example, voting rights fall under public law. Constitutional law, fiscal law, administrative law, all fall under the purview of public law. All these forms of law, being internal to the functioning of government, are covered by the principles of distributive justice.

Because private law arises out of the relationships and interactions of autonomous organizations and associations and individuals, the private-law order develops in a bottom-up, appeals-court manner. It is court-evolved law. The operative word is adjudication, not legislation. This does not mean that judges make the law, only that they base their decisions on the inner logic of private law in accordance with the principles of commutative justice. The role of legislation should be corrective rather than prescriptive. Where judgements prove unjust, where courts are corrupt, where judges cannot be trusted, there legislation has a definite role to play – because here they have to intervene in the functioning of the courts, and this is an aspect of public law. But as far as the underlying principles of justice are concerned, there legislation is an extraneous element that can only serve to confuse and bog down the judicial process.

The court-evolved nature of private law is part and parcel of the Christian-historical nature of the common-law tradition. The Constitution of Liberty evolved; it was not legislated. It arose through the integration of the classical inheritance – represented in “the three languages of the cross,” Hebrew, Greek, and Latin – among the barbarians tribes of Europe, under the leadership of the church. Sir Henry Maine characterized this process as the transition from status to contract. [4] Many have seen this has a sort of liberal triumphalism, pitting contract against status, the former desirable, the latter not. But that is false dream of liberalism, as surely flawed as the social contract theory was. For status can never be subsumed in contract; authority is the necessary and abiding context of liberty.

In fact, the growth of liberty paralleled the growth of property rights and private law. Liberty did not come on the scene as an abstraction, but as the incremental growth of concrete rights and liberties. For as individuals and associations gained their freedom they began acting in terms of that freedom. Out of these actions arose the private law.

This historical reality highlights the fact that in the common-law tradition, sovereignty is the necessary prerequisite for property. Although sovereignty serves property, that does not mean that property exists before sovereignty. On the contrary, it is sovereignty which secures property and makes the entire system of property and private law possible. Where sovereignty is uncertain, there the entire law order stands under threat. Historically, the establishment of sovereignty precedes the development of property rights and the system of market exchange and contract.

The common-law tradition further affirms that nations, not states, are sovereign. The seat of sovereignty is the nation, understood as an associated body of member associations ranging from the family to local and regional public authorities – the “members” of the body. The government only exists to administer the sovereign power located in the associated members. These nations therefore are the original building blocks of civilization. It has been this way ever since the aftermath of the Tower of Babel, when God called the nations into existence.

The original situation is nations establishing themselves on the land. The land is pacified. It is held first in common and it is then parcelled out (as, for example, the Israelites upon conquering Canaan). Land is the basic resource; upon it is erected the entire superstructure of culture and property. In this situation, the individual is subordinate to the group. Private law is inchoate; it slumbers, awaiting the stimulus of creativity and innovation. As soon as production on the land exceeds the subsistence level, room is created for cultural progress, for the multiplication of the division of labor. This process calls for the development of laws to protect and promote property; otherwise the incentive to produce is stifled. It also fosters the establishment of towns, which are veritable outposts of private law in the midst of pre-existing tribal and manorial communities. 

Contemporary legal science, developing the anticapitalist bias inherent among intellectuals for the past 200 years, is at war against private law. Private law is a “bourgeois capitalist” concept that has no standing in a truly social order. If the 19th century was the century in which the theory of the attack on private law was developed, then the 20th century was the century in which this attack was put into practice. The subsumption of private by public law was perhaps the chief focus of socialist regimes. Radbruch viewed it this way: “for an individualistic legal order, public law – the state – is only the restrictive protective framework revolving around private law and private property; for a social legal order the reverse is true – the private law is only a provisionally preserved and ever-shrinking space for private initiative within the all-encompassing public law” (“From Individualistic Law to Social Law” (1930), reprinted in Der Mensch im Recht (Göttingen, 1957), p. 40). The agenda is clear: private law as an independent structure has no standing in the socialist system.

But private law, being expressive of commutative justice, has its own inner logic, its own structure which must be respected in lawmaking of any shape. Currently, legislation is the primary source of law, both public and private. The problem with this is that legislation is primarily directed by considerations of distributive and not commutative justice. This is because the legislature is oriented towards public law, it historically has been shaped by public law, and it sees its mission in terms of public law. [5]  Add to this the modern social-democratic bias in favor of public law as in all encompassing “social” law, and one begins to see the danger of legislation to the regime of private law.

This underlying bias viewing distributive justice and by extension public law as a kind of remedy against supposed “excesses” of private law has a long history. Hugo Grotius was the first to pit commutative justice against distributive justice, and he did so in favor of commutative justice. [6] He created a hierarchy with commutative justice being strict justice, and thus capable of being expressed as civil law, and distributive justice, which he described as a moral rather than a strictly juridical category, and thus unable to be expressed in law. Later in the same century, Gottfried Wilhelm Leibniz turn this construction on its head, arguing that commutative justice formed a lower sort of justice that needed to be adjusted and corrected by distributive justice, which served as a principal of equity, correcting undesirable results arising from the administration of this lower form of justice. G. W. F. Hegel took Leibniz’s principle further, arguing that civil society – the private-law society – needed the corrective and leading role of the state to rectify its inevitable “conflicts of interest.” The entire structure of social democracy and the welfare state is built on this concept.

This is the unexamined presupposition underlying the typical modern concept of justice and law. It presupposes that private law fosters conflicts of interest and unjust outcomes. This is an expression of the conflict-of-interest world-view that I discussed in my book A Common Law. [7]  The question is, are conflicts of interest spawned by the regime of private law? Do private associations in their mutual interactions require the guidance and distributing power of an overarching state? Or is there a built-in structure of harmonization – commutation – enabling the regime of private law to function quite well on its own, making intervention superfluous if not downright destructive?

We have already answered this question in the affirmative, but let us examine the issue further. There are a variety of terms that express the principle underlying private law: retribution, restitution, reciprocity, “an eye for an eye” (lex talionis). It is indeed an ancient principle of justice and one that in itself no one has ever presumed to find fault with, at least in principle: the literal application of the lex talionis is adhered to only in primitive cultures – more advanced ones substitute a penalty considered equal, though not literally so (for example, one is not literally required to give up an eye if one causes blindness in someone else). Problems arise only upon consideration of outcomes. Private law is no respecter of persons. It does not take into consideration the relative conditions of the parties involved; it only takes cognizance of the matter involving them. Thus, for example, if a poor person steals from a rich one, private law requires restitution regardless of the fact that one has much and one has little. Private law only sees that one has robbed another, creating a disturbance in the legal order that must be restored.

It is precisely this lack of “social concern” that sticks in the craw of the modern ethicist. He starts out yielding the point that the principle underlying private law is just. But he then argues that its outworking is unjust. The argument used to justify this sleight of hand runs along the lines of “moral man, immoral society” or “structural sin.” The individuals involved have done nothing wrong, yet the outcome of their actions is deemed undesirable. Therefore something must be done to correct this unforeseen consequence. Therefore private law cannot be allowed an autonomous existence. Therefore economic freedom cannot be allowed free rein. It must be restricted for the sake of “social justice.”

This is where and distributive justice invades the proper sphere of commutative justice. Public law in the name of social justice begins to subsume private law. It does so through legislation. Which is why the question of the source of law is so important. If legislation is the only legitimate source of law, then private law as an autonomous regime is imperiled. Because, as we have seen, legislation is inherently distributive. Its invasion into the area of private law is usually to bend outcomes away from how they normally would turn out.

Private law must be defended from these invasions. It must be recognized as an autonomous realm, indispensable for the functioning of a free society, a society of associations. It therefore must be allowed to grow and develop in terms of the interactions of these associations, in line with the principles of commutative justice. On this realization depend the freedoms we treasure, the tradition we have come to know as the common law.